Scotch Manufacturers constructs luxury cruise ships which take an average of 33 months to complete. During 2013, Scotch began construction on a cruise ship for Heavenly Vacations. The contract price is $4,500,000 with completion scheduled for early in 2015. The company's fiscal year ends on December 31. The following is a year-by-year recap of construction costs incurred and the estimated costs to complete the project as of the end of each year.

	2013		2014		2015
Actual costs incurred during the year	$	800,000	$	2,300,000	$	825,000
Actual costs incurred in prior years		0		800,000		3,100,000
Cumulative actual costs incurred to date		800,000		3,100,000		3,925,000
Estimated costs to complete at end of year		2,300,000		775,000		0
Total costs (actual + estimated)	$	3,100,000	$	3,875,000	$	3,925,000
Billings made during the year	$	750,000	$	3,100,000	$	725,000
Cash collections during year		550,000		2,250,000		1,750,000

How much gross profit will Scotch Manufacturers recognize in 2014 assuming Scotch Manufacturers uses the completed contract method?

$0

$100,000

$575,000

($50,000)